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On November 8, 2011, Power Corp. sold land to Wood Co., its

On November 8, 2011, Power Corp. sold land to Wood Co., its wholly owned subsidiary. The land cost $61,500 and was sold to Wood for $89,000. From the perspective of the combination, when is the gain on the sale of the land realized? A. When Wood Co. begins using the land productively. B. When Wood Co. Sells the land to a third party. C. As Wood uses the land. D. No gain can be recognized. E. Proportionately over a designated period of years. Clemente Co. owned all of the voting common stock of Snider Co. On January 2, 2010, Clemente sold equipment to Snider for $125,000. The equipment had cost Clemente $140,000. At the time of the sale, the balance in accumulated depreciation was $40,000. The equipment had a remaining useful life of five years and a $0 salvage value. Straight-line depreciation is used by both Clemente and Snider. At what amount should the equipment (net of depreciation) be included in the consolidated balance sheet dated December 31, 2010? A. $85,000 B. $100,000 C. $105,000 D. $80,000 E. $95,000 On January, 1, 2011, Payton Co. sold equipment to its subsidiary, Starker Corp., for $115,000. The equipment had cost $125,000, and the balance in accumulated depreciation was $45,000. The equipment had an estimated remaining useful life of eight years and $0 salvage value. Both companies use straight-line depreciation. On their separate 2011 income statements, Parton and Starker reported depreciation expense of $84,000 and $60,000, respectively. The amount of depreciation expense on the consolidated income statement for 2011 would have been A. $148,375 B. $144,000 C. $139,625 D. $109,000 Prince Corp. owned 80% of Kile Corp.'s common stock. During October 2011, Kile sold merchandise to prince for $140,000. At December 31, 2011, 50% of this merchandise remained in Prince's inventory. For 2011, gross profit percentages were 30% of sales for Prince and 40% of sales for Kile. The amount of unrealized intercompany profit in ending inventory at Dec 31, 2011 that should be eliminated in the consolidation process is A. $56,000 B. $22,400 C. $28,000 D. $42,000 Pot Co. holds 90% of the common stock of Skillet Co. During 2011, Pot reported sales of $1,120,000 and cost of goods sold of $840,000. For this same period, Skillet had sales of $420,000 and cost of goods sold of $252,000. Included in the amounts for Pot's sales were Pot's sales of merchandise to Skillet for $140,000. There were no sales from Skillet to Pot. Intra-entity sales had the same markup as sales to outsiders. Skillet still had 40% of the intra-entity sales as inventory at the end of 2011. What are consolidated sales and cost of goods sold for 2011? A. $1,400,000 and $1,022,000 B. $1,540,000 and $1,092,000 C. $1,400,000 and $966,000 D. $1,540,000 and $1,078,000 Pot Co. holds 90% of the common stock of Skillet Co. During 2011, Pot reported sales of $1,120,000 and cost of goods sold of $840,000. For this same period, Skillet had sales of $420,000 and cost of goods sold of $252,000. Included in the amounts for Skillet's sales were Skillet's sales of merchandise to Pot for $140,000. There were no sales from Pot to Skillet. Intra-entity sales had the same markup as sales to outsider, Pot still had 40% of the intra-entity sales as inventory at the end of 2011. What are consolidated sales and cost of goods sold for 2011? A. $1,400,000 and $974,400 B. $1,540,000 and $1,092,000 C. $1,540,000 and $1,078,000 D. $1,400,000 and $966,000 Pot Co. holds 90% of the common stock of Skillet Co. During 2011, Pot reported sales of $1,120,000 and cost of goods sold of $840,000. For this same period, Skillet had sales of $420,000 and cost of goods sold of $252,000. The reported sales did not include any intra-entity sales. In addition to the reported amounts, there were intra-entity sales from Pot to Skillet in the amount of $140,000. There were no sales from Skillet to Pot. Intra-entity sales had the same markup as sales to outsiders. Skillet still had 40% of the intra-entity sales as inventory at the end of 2011. What are consolidated sales and cost of goods sold for 2011? A. $1,400,000 and $1,071,000 B. $1,400,000 and $1,022,000 C. $1,400,000 and $966,000 D. $1,540,000 and $1,092,000 Edgar Co. acquired 60% of Stendall Co. on Jan 1, 2011. During 2011, Edgar made several sales of inventory to Stendall. The cost and selling price of the goods were $140,000 and $200,000, respectively. Stendall still owned one-fourth of the goods at the end of 2011. Sonsolidated cost of goods sold for 2011 was $2,140,000 because of a consolidating adjustment for intra-entity sales less the entire profit remaining in Stendall's ending inventory. How would noncontrolling interest in net income have differed if the transfers had been for the same amount and cost, but from Stendall to Edgar? A. Noncontrolling interest in net income would have decreased by $6,000 B. Noncontrolling interest in net income would have decreased by $56,000 C. Noncontrolling interest in net income would have decreased by $18,000 D. Noncontrolling interest in net income would have increased by $20,000 Which of the following statements is true regarding an intra-entity sale of land? A. A gain or loss in eliminated by adjusting Stockholders' equity through comprehensive income. B. A loss and a gain are always eliminated in a consolidated income statement. C. A loss and a gain are always recognized in a consolidated income statement. D. A loss is always recognized bet a gain is eliminated in a consolidated income statement. Parent sold land to its susidiary for a gain in 2008. The subsidiary sold the land externally for a gain in 2011. Which of the following statements is true? A. A gain will be reported in the consolidated income statement in 2008 B. A gain will be reported in the consolidated income statement in 2011 C. Only the parent company will report a gain in 2011. D. The subsidiary will report a gain in 2008. An intra-entity sale took place whereby the transfer price exceeded the book value of a depreciable asset. Which statement is true for the year following the sale? A. A worksheet entry is made witha a debit to retained earnings for a downstream transfer, regardless of the method used to account for the investment. B. A worksheet entry is made with a debit to gain for a downstream transfer. C. A worksheet entry is made with a debit to gain for an upstream transfer. D. A worksheet entry is made with a debit to investment in subsidiary for a downstream transfer when the parent uses the equity method. An intra-entity sale took place whereby the book value exceeded the transfer price of a depreciable asset. Which statement is true for the year following the sale? A. A worksheet entry is made with a debit to retained earnings for an upstream transfer. B. No worksheet entry is necessary/ C. A worksheet entry is made with a debit to investment in subsidiary for a downstream transfer. D. A worksheet entry is made with a credit to retained earnings for an upstream transfer. Webb Co. acquired 100% of Rand Inc. on Jan 5, 2011. During 2011, Webb sold goods to Rand for $2,400,000 that cost Webb $1,800,000. Rand still owned 40% of the goods at the end of the year. Cost of goods sold was $10,800,000 for Webb and $6,400,000 for Rand. What was consolidated cost of goods sold? A. $15,040,000 B. $14,560,000 C. $17,200,000 D. $16,960,000 Patti Company owns 80% of the common stock of Shannon, Inc. In the current year, Patti reports sales of $10,000,000 and cost of goods sold of $7,500,000. For the same period, Shannon has sales of $200,000 and cost of goods sold of $160,000. During the year, Patti sold merchandise to Shannon for $60,000 at a price based on the normal markup. At the end of the year, Shannon still possesses 30% of this inventory. 1. Compute consolidated cost of goods sold. A. $7,600,000 B. $7,604,500 C. $7,500,000 D. $7,660,000 2. Assume the same information above, except Shannon sold inventory to Patti. Compute consolidated sales. A. $10,140,000 B. $10,126,000 C. $10,260,000 D. $10,000,000 On Jan 1, 2010, Smeder company, an 80% owned subsidiary of Collins, Inc., transferred equipment with a 10-year life (six of which remain with no salvage value) to Collins in exchange for $84,000 cash. At the date of transfer, Smeder's records carried the equipment at a cost of $120,000 less accumulated depreciation of $48,000. Straight-line depreciation is used. Smeder reported net incomve of $28,000 and $32,000 for 2010 and 2011, respectively. All net income effects of the intra-entity transfer are attributed to the seller for consolidation purposes. 1. Compute Collin's share of Smeder's net income for 2010. A. $12,400 B. $12,800 C. $18,000 D. $14,400 2. Compute Collin's share of Smeder's net income for 2011. A. $27,600 B. $24,000 C. $34,000 D. $27,200 3. For consolidation purposes, what net debit or credit will be made for the year 2010 relating to accumulated depreciation for the equipment transfer? A. Credit accumulated depreciation, $48,000 B. Debit accumulated depreciation, $46,000 C. Debit accumulated depreciation, $2,000 D. Credit accumulated depreciation, $46,000 4. What is the net effect on consolidated net income in 2010 due to the equipment transfer? A. Increase $2,000 B. Increase $10,000 C. Decrease $14,000 D. Decrease $10,000 Stiller Company, an 80% owned subsidiary of Leo company, purchased land from leo on March 1, 2010, for $75,000. The land originally cost Leo $60,000. Stiller reported net income of $125,000 and $140,000 for 2010 and 2011, respectively. Leo uses the equity method to account for its investment. On a consolidation worksheet, what adjustment would be made for 2010 regarding the land transfer? A. Credit gain for $50,000 B. Debit gain for $50,000 C. Debit land for $15,000 D. Credit land for $15,000 Stark Company, a 90% owned subsidiary of Parker, Inc., sold land to Parker on May 1, 2010, for $80,000. The land originally cost Stark $85,000. Stark reported net income of $200,000, $180,000 and $220,000 for 2010, 2011, and 2012, respectively. Parker sold the land it purchased from stark in 2010 for $92,000 in 2012. 1. Compute the gain or loss on the intra-entity sale of land. A. $80,000 gain B. $80,000 loss C. $85,000 loss D. $5,000 loss 2. Which of the following will be included in a consolidation entry for 2010? A. Credit land for $5,000 B. Debit gain for $5,000 C. Credit loss for $5,000 D. Debit loss for $5,000 3. Which of the following will be included in a consolidation entry for 2011? A. Credit land for $5,000 B. Debit retained earnings for $5,000 C. Credit investement in subsidiary for $5,000 D. Credit retained earnings for $5,000 4. compute income from Stark reported on Parker's books for 2010. A. $175,500 B. $184,500 C. $205,000 D. $200,000

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